THIS IS HUGE! Lifetime Allowance and other changes

In the March 2023 budget, Chancellor Jeremy Hunt pulled out from his red box some key changes to pensions. We’re going to deal with the annual allowance first and then the lifetime allowance, fill in some gaps that weren’t in the speech, and then look at what you might need to DO as a result of these changes.

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[MeaningfulMoney]

If the Chancellor didn't keep making changes to pensions, I probably wouldn't have a job! But there are more reasons than that to be cheerful about the March 2023 Budget. Here's what you need to KNOW and DO...

[riko]

This should be taught in schools from an early age

[nickfifield]

Please can you explain the tax benefits now the LTA is no more. For example,
It’s my understanding, with the LTA we paid 55% tax above the £1.074 million, is this changed to the income tax rate of 40%?

[ghowells]

However, labour have said they will reverse the LTA if, sorry when, they win next year.

[neilmishra]

Can you do a video with walk through examples please to see how the changes would effect you before and after.

[Grumpygaming]

It's really great to see videos on the high earners what about us poor sods on minimum wage ? I work for our King in a round about way and the wages absolutely suck 😡

[gerbil]

Love your videos. Suggestion for a future topic that is a little different and something I am struggling to find is those with no dependents, no one close to leave anything too. The childless/childfree appear to be increasing in number so whilst an edge case now will likely become more common. Whats the best way to work out to have enough but not leave lots behind which whilst will go to charity so not wasted can feel like taking too much of a financial hit for a benefit I may never see?

[robertmarsh]

Disgusted by Labour's attitude to the LTA..why are they so desperate to penalise anyone that invests for their future?
Labour brought this in long ago - 2006, and it was over £2M then. It has been shrunk constantly. £1M won't go far in 10 years time. As it is, it probably will only generate a sustainable income of £35k. What will that be worth after 10 years inflation? Are we meant to be contributing into our pensions or not?

[torus]

I have currently used 19% of my LTA and if i drawdown another 100K this year 23/24 that will be 29%. My question is If I crystalise the remaining in tax year 24/25 will I not add to the LTA usage. Reason I ask is that if Labour win the next election LTA will return. If this is the case what percentage of LTA use will I fall

[roywilliams]

Tax free cash question. - CONTENT REQUEST
Now that tfc has a fixed monetary value, is there now a monetary value of dc pension fund that is not beneficial to go beyond?

I.e once you take the max tfc and the remainder of your pot let's you withdraw a private pension plus state pension up to the equivalent the higher tax band you will start paying 40% tax. If this is the case why would you invest more in a pension scheme rather than take it as taxable income today at 40% tax?

I understand there may be other inheritance tax benefits.

[Holdeenio]

Great summary Pete, thank you. Definitely confirmed your advice to ignore the LTA charge when paying in, was the correct advice.

[slayerrocks]

If you salary sacrifice into your pension, reducing tax and National Insurance payments, this is the value of your starting collateral.

Basic rate: £100 costs you £68, which means, you receive a boost of 47% on your investment straight away.

At the higher rate (£50k salary) : £100 costs you £58, which means you receive a boost of 72.5% !! on your investment straight away.

If your company matches it 1 for 1 (usually to a limited percentage), and this is all applied at your highest tax rate, it works out as follows:

Basic: 195% so £100 costs £34
Higher: 245% so £100 costs £29

Invested for 10 years at 10% returns that £100 becomes £259.37 of which £64.84 is tax-free.

Over 30 years, £1, 745 of which £436 is tax-free

Not bad for £29-£34, eh? Even accounting for inflation.

Don't opt out of your pension scheme. Try to contribute enough to get the full matched amount out of your employer.

[stevenrose]

Hi the pension pot limit was that for the amount contributed or the total value including returns. Be great for clarity incase is reintroduced

[petsloveonly]

Can u explain how to transfer pensions into a sipp or sass and use it to buy commercial properties in a ltd company 🤔

[ianswales]

Just wondering if your at your life time allowance and the tax free pension cash is frozen in cash terms then you just putting off the tax til a later day as you saving not having to pay the extra 25% tax on pension over the lifetime allowance but not getting 25% tax free cash on that amount over the lifetime allowance.

[shona]

Great video. If Ihave already drawn a db pension in 2012 and have a second db pension to draw that is over the old LTA, I assume I should do that after 5/4 to avoid a LTA being reintrouduced by Starmer ?? Thanks.

[NZAnimeManga]

Highest tax burden since WWII, and these LTA + Annual Allowance changes will just be reversed by the next Labour govt (plus, will affect very few people). Budget was a massive disappointment.

[NbyD]

so great all thoe rich people are getting ahead further in old age too.

[philipbuckley]

Dear Pete, I am a Consultant Hospital Doctor. Loads of my colleagues have dropped out of the NHS Pension scheme, largely to avoid pension tax charges. I imagine that some of them might reconsider now though. Cheers for the video.

[jamessaddler]

Great video. Complete scrapping of the LTA was certainly a surprise!